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Centre for Public Corporate Affairs Report on Charities and the Global Recession

A report into the impact of the global resecession on Not for Profit organisations has revealed more Australians are turning to community organisations for help - confirming a smaller study carried out recently by Givewell.

Centre for Public Corporate Affairs Report on Charities and the Global RecessionThursday, 17th September 2009 at 1:13 pm

A report into the impact of the global resecession on Not for Profit organisations has revealed more Australians are turning to community organisations for help – confirming a smaller study carried out recently by Givewell.

The Impact of the economic downturn on Not for Profit organisation management report by the Centre for Corporate Public Affairs found that organisations are experiencing a reduction in investment income, corporate funding and funding from philanthropic trusts and foundations, impacting on their ability to provide services to their increasing client base.

The report found 65 per cent of NFP organisations reported an increase in demand for services as a result of the economic downturn, with 83 per cent expecting demand to increase further in the coming year.

A similar online survey by Givewell in June and July 2009 also found that almost two-thirds of charities (63%) have experienced a material increase in the demand for their services for the 2009 financial year, with an overall average weighted increase of 4.9 per cent. Givewell’s analysis shows that after combining the weighted increase for 2009 with the expected increase in 2010, the average weighted increase in demand for services since the downturn first emerged is expected to be around 10 per cent by 2010.

The CCPA report says that seventy-seven per cent of NFPs say they are reducing costs. Some of this is taking place in staffing levels, with reduction of staff hours, redundancies, not replacing staff when they leave, or a move to rely more on part-time or volunteer staff.

In other areas, administrative costs, outsourcing (NFPs are looking to do more in-house) and travel are all under review. Some NFP practitioners note that they already operate lean budgets, therefore a cost review has been difficult.

While there have been some changes to staffing levels, for the most part NFP organisations report no major changes to levels of full-time, part-time or volunteering employees.

Where there have been changes to staff numbers, this appears to be a result of changes to fundraising approaches, or due to a review of fundraising.

Anecdotal evidence suggests that the number of people who are volunteering is increasing, due to redundancies and unemployment. The survey shows that 28 per cent of NFP organisations report an increase in volunteers in the 2008/09 year. Thirty-five per cent expect an increase in volunteers in the 2009/10 financial year.

The report says this suggests there may be a lag effect from actual redundancies to the pick up in availability of volunteers.

Not for Profit employees are spending more time managing relationships with major donors and partners, and working closely with their Boards to manage uncertainties. NFP employees are also spending more time on marketing to increase awareness of the issues their organisation addresses, as well as to differentiate them from peer organisations.

It says there is greater appetite for collaboration within the Not for Profit sector as a result of the downturn. In order to meet growing demand for services, NFP organisations are collaborating or rationalising services with other peer organisations.

The survey concludes that nearly half of NFP organisations are considering some means of collaboration.

Looking ahead it says 2010 is expected to continue to be a challenging one for NFP organisations. They anticipate further decreases in investment income and funding from companies, major donors, philanthropic trusts and foundations. Nearly 40 per cent of NFP organisations surveyed expect an increase in government funding. A third expect fundraising to increase in areas such as regular giving, online donations and event fundraising.

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